Clothing and accessories retailer Gap (NYSE: GAP) will be announcing earnings results tomorrow after the bell. Here’s what to look for.
Gap beat analysts’ revenue expectations by 0.6% last quarter, reporting revenues of $3.83 billion, up 1.6% year on year. It was an exceptional quarter for the company, with an impressive beat of analysts’ EBITDA estimates and a solid beat of analysts’ EPS estimates.
Is Gap a buy or sell going into earnings? Read our full analysis here, it’s free.
This quarter, analysts are expecting Gap’s revenue to decline 5.3% year on year to $4.07 billion, a reversal from the 1.3% increase it recorded in the same quarter last year. Adjusted earnings are expected to come in at $0.37 per share.
Analysts covering the company have generally reconfirmed their estimates over the last 30 days, suggesting they anticipate the business to stay the course heading into earnings. Gap has missed Wall Street’s revenue estimates three times over the last two years.
Looking at Gap’s peers in the apparel and footwear retail segment, some have already reported their Q4 results, giving us a hint as to what we can expect. Abercrombie and Fitch delivered year-on-year revenue growth of 9.1%, beating analysts’ expectations by 1.2%, and Urban Outfitters reported revenues up 9.4%, in line with consensus estimates. Urban Outfitters traded up 8.1% following the results.
Read our full analysis of Abercrombie and Fitch’s results here and Urban Outfitters’s results here.
Stocks generally had a good 2024. The Fed fought high inflation and won without sending the economy into a recession, otherwise lovingly known as a soft landing. The U.S. Central Bank is now cutting rates. That, plus the election of Donald Trump in November 2024, sent markets even higher, and while some of the apparel and footwear retail stocks have shown solid performance, the group has generally underperformed, with share prices down 12.6% on average over the last month. Gap is down 10.9% during the same time and is heading into earnings with an average analyst price target of $28.44 (compared to the current share price of $20.50).
